An E-publication from the Delaware League Services
An E-publication from the Delaware League Services |
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Fourth Quarter 2007
StretchPay, the Credit Unions’ Answer to Payday Loans
Overview
StretchPay – The Credit Union Salary Advance Alternative is a special loan program designed to help members who need a small-dollar loan to carry them over until they receive their next regularly-scheduled income check. StretchPay is designed to be an alternative to expensive for-profit payday lenders that often charge $15 per $100 up to $800 for two to four weeks.
StretchPay is a special line-of-credit loan designed to make it easy and less expensive for members to obtain affordable short-term credit. StretchPay is set up with one important difference to traditional lines-of-credit: a borrower must repay the entire outstanding balance (plus interest) before subsequent advances are permitted. Thus, if a borrower takes a $250 advance on their StretchPay line of credit, they must pay off the entire balance before borrowing again.
StretchPay is significantly less expensive than a traditional payday loan. Borrowers pay a $35 annual fee (for a $250 line of credit) and an interest rate of around 18% APR on their advances. The annual fee may be taken out of their first advance during a 12-month period.
A borrower who uses StretchPay for 12 advances on a $250 line of credit during a 12-month period will pay approximately $77 for 12-months’ access to the loan. A borrower who uses a traditional payday lender may pay more than $400 for the same amount of credit.
Each time your credit union collects an annual fee from a StretchPay borrower, you forward the fee to Credit Union Outreach Solutions, Inc. (See boxed text for explanation.) In turn, CUOSI helps your credit union offset any credit losses sustained under the program. This way, you are able to offer members an alternative to expensive payday lenders without incurring the credit risk sometimes associated with small-dollar, minimally-underwritten loans.
StretchPay is offered to your members using minimal underwriting criteria. Members must be 18 years old, an established member of your credit union for at least 60 days, and not delinquent on existing loans or negative in any share account. Members must have verifiable income, not be in the process of filing for bankruptcy under any chapter of the bankruptcy codes, and must not have caused a loss to the credit union.
Specifics of the StretchPay loan include:
Benefits of StretchPay
For Your Member:
Summary of Implementation Steps
Credit unions should follow these steps to implement the StretchPay loan program.
1. Obtain approval from your Board of Directors.
2. Join Credit Union Outreach Solutions, Inc.
3. Adopt a StretchPay Line of Credit policy and procedure.
4. Set StretchPay up on your data processing system.
5. Set up StretchPay documents.
6. Train employees on the StretchPay program.
7. Set up the monthly accounting system for fees and loss recovery.
8. Address collections efforts.
9. Develop a marketing plan.
10. Begin offering StretchPay – the credit union salary advance alternative.
Editor’s note: The Delaware League is promoting StretchPay to its member credit unions. If you want more information, contact Jane Bailey, (302) 322-9341 or jane@dcul.org.
Gift Cards - Great For The Holidays!
Why Should I Offer Gift Cards?
Gift cards are versatile, safer than cash and a product that consumers expect –- as evidenced by the fact that gift cards generated transactions of $29 billion last year.
Prepaid cards are the latest example of the removal of paper from the payments cycle. Cash, checks, gift certificates, traveler’s checks and payroll checks are all diminishing in volume. Prepaid is a great substitute and can be more appropriate than debit and credit, especially as a substitute for typical gifts that can be the wrong color, wrong size, wrong kind or from the wrong store. A gift card that can be used anywhere Visa is accepted is the right choice. Click here for more details: Gift Card Product Sheet
Agent Issuer (turnkey):
No enrollment fee, no monthly fees, no hardware/software to buy, no long-term commitment. You only pay for the cards you order, plus shipping. And at a total cost of less than $1.50 per card, this is a very low-risk, low-effort, high-value product.
The gift cards are also designed with your members in mind. You set the retail price (recommended at $2.95), which allows for flexibility with special offers and preferred clients. The cardholder fees are already lower than the industry standard, but if all the funds are used within the first four months and service issues are directed through the consumer website, the gift card recipient could avoid all fees.
Contact Jane Bailey (302.322.9341, jane@dcul.org) for more information on offering the Visa gift card.
CUNA Mutual Bondability Program Financially Protects Credit Unions
In 2006, Financial Center Credit Union made a hiring decision that could have cost the Stockton, Calif. institution hundreds of thousands of dollars. Thanks to CUNA Mutual’s online Bondability Verification Request program, the $289.7 million credit union was able to reverse its hiring decision before the employee did any damage.
“We had hired a teller who had just gone to work for us, when we received notification that she had a previous criminal conviction for fraud and perjury,” said Beth Schneider, Financial Center CU’s human resources manager. “We submitted her information to CUNA Mutual’s Bondability department. Her bondability was revoked and her employment terminated that same day.”
CUNA Mutual’s rapid response not only protected credit union assets, but also saved the institution from further resource expenditure, according to Schneider.
“The quick turnaround was key because it not only reduced our exposure to loss, but kept us from investing additional resources to train this individual,” she said.
How much was CUNA Mutual able to save the credit union? According Dr. John Sullivan, an HR visionary and professor of management at San Francisco State University, research has shown that a bad hire can cost a business 2½ times the person’s salary or as much as $180,000 in lost time, training, and productivity. That’s prior to any theft or fraud that person might commit before being apprehended. CUNA Mutual’s Bondability program is designed to protect Credit Union Bond policyholders from experiencing any level of financial loss. The Credit Union Bond is underwritten by CUMIS Insurance Society, Inc., a member of the CUNA Mutual Group.
“Years ago CUMIS Insurance Society, part of CUNA Mutual, identified the need for the capability to check the Bondability of credit union employees to protect the institution and the insurer from experiencing significant levels of internal fraud losses,” said Wayne Scholze, manager of CUNA Mutual’s Bondability Department. “That program is now available online through the CUNA Mutual Web site, providing a rapid turnaround of information that determines whether potential or new hires are bondable, thus identifying good employee prospects for the credit union.”
The process is simple and fast. Credit union representatives, typically human resource professionals and/or hiring managers, enter the individual’s name and Social Security number in a secured Bondability functionality at www.cunamutual.com. That individual’s information is compared to a database of more than 40,000 individuals who have caused credit unions losses due to dishonest acts over the past 30-plus years. If a match is made, the credit union is notified that the employee or potential employee is not bondable, a clear signal that the individual may be a liability to the credit union.
More than 5,000 credit unions are already enrolled in the online Bondability Verification Program and CUNA Mutual processes some 74,000 requests for Bondability information each year, Scholze said. Bond coverage is terminated on 700 to 800 individuals each year and more than 200 applicants are identified each year that have caused a previous loss, he added, saving their respective credit unions considerable sums in training cost and potential fraud losses. The average loss associated with an employee dishonesty-type claim is approximately $50,000, but can easily reach multi-million dollar figures in a high-profile embezzlement or fraud case.
The Bondability Department can also provide credit unions with examples of good employment applications and assist in drafting releases required for background checks and other investigative efforts.
“CUNA Mutual’s Bondability services hold great value for us,” Schneider said. “Our member relationships and their trust in our ability to protect them and their assets are key to the credit union and its mission. We would never consider going without CUNA Mutual’s Bondability verification service.”
For more complete information about CUNA Mutual’s Bondability Verification Request program, contact your CUNA Mutual representative at 1-800-356-2644 or visit www.cunamutual.com.
© CUNA Mutual Group 2007. Used with permission.
BOND-0607-B6B2
Remote Teller Capture
Mid-Atlantic Corporate, along with partner
Bluepoint Solutions, is offering software that allows tellers to capture and process drafts
right at the point-of-presentment. Unlike
Remote Branch Capture, Bluepoint’s
Remote Teller Capture actually interfaces
with your core processor at each teller
workstation when it is coupled with their
Receipt Manager product and allows the
check images to be transmitted in real-time,
directly to the corporate. When a check-based
transaction is posted; the Teller Capture program automatically appears on the workstation. With all transaction information integrated into the software, the teller only has to scan the checks. The benefit is that each transaction is checked, balanced and processed right at the teller line and the accompanying check images are automatically indexed and stored. Therefore, most end-of-day check balancing, as well as all cash letter preparation, scanning, microfilming and encoding are completely eliminated!
The scanning of checks is quite fast so your members should notice little or no increase in wait time. In fact, member service should improve in a Teller Capture scenario because researching a check item can now be done in seconds, and possible return items can be caught at the teller window. Other benefits of Remote Teller Capture and immediately capturing a check image include:
As you can see, there are many advantages to using Remote Teller Capture. For those credit unions already using Mid-Atlantic’s Remote Branch Capture program you may want to consider moving to the Teller Capture option. If so, our Remote Branch Capture service is upgradeable to the teller option. Depending on your branch situation, some credit unions may even consider using both programs.
If you are looking to improve member service, boost employee productivity and reduce net operating expenses, contact your Corporate Account Manager toll-free by calling (800) 622-7494.
Provide Financial Peace of Mind to Your Senior Members with a
Reverse Mortgage
By now, you have probably seen commercials on TV as well as ads in magazines and newspapers about the “newest” senior mortgage product - Reverse Mortgages. In truth, Reverse Mortgages have been available since the late 1980’s, but have gained prominence only recently as a financial tool for seniors homeowners.
As our senior population began to realize that their retirement income was not going to cover the increased costs of utilities, medicine and healthcare, the Reverse Mortgage program has become a much sought after alternative giving them access to their largest asset – the equity in their home. Unlike traditional home equity loans, the Reverse Mortgage has no income or credit requirements and there are no monthly payments made back to the lender. Testimonials from clients almost unanimously state that the Reverse Mortgage gave them “Peace of Mind.” Now they are free from their mortgage payment forever and have improved their quality of life so that they can enjoy their retirement years.
The federally-insured Reverse Mortgage program is tailored to meet the needs of seniors so that they can increase their cash flow without creating a monthly debt. In addition, they are guaranteed that their home will never be taken away! In order to qualify for a Reverse Mortgage, a homeowner must be 62 or older and live in the property as their primary residence. Borrowers can use the tax-free money they receive from the Reverse Mortgage for any reason.
Credit unions can use the Reverse Mortgage to promote financial security and independence for senior members and the parents of Baby Boomer members. It is critical that your branch management and tellers educate these clients on the benefits of this program. To promote this effort Academy Mortgage, a top-ten nationwide Reverse Mortgage lender, is dedicated to educating our business partners as well as potential borrowers about this unique financial alternative. We offer individualized training, telephone support, in-office consultations and at-home face-to-face visits to discuss the details of the Reverse Mortgage program.
Mark McVearry, President of Academy Mortgage, has been specializing in Reverse Mortgages since 1990. He understands the unique needs of his senior clients as well as the needs of his network of business partners providing services to our treasured generation. Our trained Reverse Mortgage Specialists will show you how the Reverse Mortgage is a smart choice for your members and your business. Let our experience work for you.
Most retirees are in a challenging position in today’s economy. They must live on a fixed income in a world where the cost of living is constantly rising. They seek financial peace of mind, but don’t know how to get it. The best performing asset in their financial portfolio is their home, but how do they tap that money without creating a monthly debt or selling the property? The answer is a Reverse Mortgage from Academy Mortgage. We know Reverse Mortgages.
Don Jeffries is Academy’s Reverse Mortgage Specialist in Delaware. He would like to meet with you to discuss offering this unique and niche service to your members. Please welcome him when he calls on you.
Getting Past the Moans and Groans of Performance Management
Written by: HRValue Group, LLC
It’s time for the annual performance reviews, and you can hear the moans and groans up and down the halls coming from behind closed doors. The clock is ticking; the form is overdue; and you still don’t know what to write. What’s wrong with this picture!?
Performance Management is all about the on-going process of communications: communicating what the job entails; communicating what your credit union’s standards are; communicating where the strategic plan is taking your credit union this year. Communicating when the job is done well and communicating when it requires additional development. If you are filling out the annual performance review and none of this communication has taken place during the last twelve months, you have good reason to moan.
If you want to improve this process, let’s start with some basics. They may not help you with today’s review, but we guarantee results for next year! None of these steps requires more than an hour of your time. The informal steps include minutes of your time. The One Minute Manager says “Goals begin behaviors. Consequences maintain behaviors.” Good performance management systems create and maintain winning behaviors. Does that sound worth your time?
Job Description. Every employee should have a job description that outlines the requirements and expectations of the job. HRValue Group believes the job description is so important that it recommends the employee and the manager both sign the job description on an annual basis. Not only is this good documentation for communicating the requirements of a position, it is also a vehicle to discuss how the job may have changed in the last year. Have you instituted risk-based lending recently? Is it somehow reflected in your new job descriptions? Have you instituted on-line banking and do those new requirements show up somewhere? If an employee is not sure of all the requirements of the position, how can he or she succeed?
Co-Create a Performance Plan. Your employee is your partner in success. No one can manage a department or a group of employees and be successful without this cooperative partnership. A performance plan is simply an outline of goals and standards for the upcoming year. The standards are those absolute basics for the job – the conditions of continued employment. The goals are the new challenges, perhaps the new stretches for a person. For example: The standards for a teller typically include accuracy, punctuality, positive member relations, and good attendance; while a goal may include cross-servicing members and expanding products by 5%. Include your employee in the creation of these requirements. This way you get to discuss what’s important and why it is important. You get the employee involved in your success, the credit union’s success, and his or her own success – a win-win for everyone.
Meet and Discuss Goals and Standards Regularly. That performance plan now needs to be nurtured and tweaked, changed and updated to reflect reality. A merger may reflect new hours; a leave of absence may require shifts in focus; this is simply life. Meet with your employees periodically – at least once a quarter – to insure that the performance plan is on track, or changed if necessary. Again, this is an opportunity for communication and a place to discuss and document both achievements and challenges.
Praise Successes When They Happen. Be sure to let your employees know when they have achieved a goal, gone above and beyond, met a milestone. What is easier than a congratulatory email? What is easier than a “thank you” in front of peers? Celebrate success in ways that are simple, efficient, and thoughtful.
Acknowledge Mistakes When They Happen. If a mistake is made, talk about it when it happens, not three weeks later. Set the time aside to find out what happened and get all the facts. Set the time aside to meet with the employee in private and discuss the situation. Co-create solutions so its likelihood of happening again are mitigated. And then move on. Be careful not to get mired in a problem that should have an ending.
Keep an Open Door. If you truly believe your employee is your partner in success, you want to be sure that employee is comfortable bringing an issue or situation or change to your attention. If he or she needs guidance, it is your job to give that guidance. If he or she needs further development, it is your job to consider its appropriateness. By having an open door that mirrors your open communications, your job of managing performance is simplified.
Now Create the Performance Review. So here we are a year later. You and your employee have discussed the job description, have set goals and standards together, have met briefly during the year to review progress, have talked informally about developmental needs and other challenges throughout the year, and have formed a partnership to get the job done. Gone are the moans and groans. Gone is the anxiety over delivering a bad review because earlier in the year, and throughout the year, issues that could have caused a bad performance evaluation have been reviewed and resolved. You have embraced a management style which proves that good performance management systems create and maintain winning behaviors. And it really didn’t take that much time after all, did it?
Now its time to start the annual cycle all over again for the upcoming year….
HRValue Group is jointly owned by a consortium of state leagues and CUNA Mutual Group. With nationally-recognized products and services-including executive search, management training, competitive compensation, succession planning, and many more-HRValue Group can help you build your team, elevate performance, and achieve success. For more information, please call HRValue Group, LLC at 888.272.4598 or visit www.hrvaluegroup.com .
HAPPY HOLIDOGS!
Thank you for reading Service Issues!
Jane Bailey, Editor
Delaware Credit Union League
www.jane@dcul.org